United States Bankruptcy Court Central District of California Chief Judge Maureen Tighe, Presiding Courtroom 302 Calendar San Fernando Valley Wednesday, June 24, 2020 302 Hearing Room 9:30 AM Christopher Michael Niblett 1:19-11762 Chapter 13 #1.00 Motion for relief from stay BROKET SOLUTIONS, INC., DBA NEW AMERICAN FUNDING fr. 4/29/20; 5/13/20 55 Docket Continued from 4/29/20; 5/13/20 Debtor payed Movant $6200 and is still working on APO for the rest. Nothing has been filed since the last hearing (5/13/20). What is the status of this Motion? TELEPHONIC APPEARANCE REQUIRED Tentative Ruling: Party Information Debtor(s): Christopher Michael Niblett Represented By Elena Steers Trustee(s): Elizabeth (SV) F Rojas (TR) Pro Se Page 1 of 69 6/24/2020 8:22:12 AM
Transcript
United States Bankruptcy CourtCentral District of California
9:30 AMChristopher Michael Niblett1:19-11762 Chapter 13
#1.00 Motion for relief from stay
BROKET SOLUTIONS, INC., DBANEW AMERICAN FUNDING
fr. 4/29/20; 5/13/20
55Docket
Continued from 4/29/20; 5/13/20Debtor payed Movant $6200 and is still working on APO for the rest. Nothing has been filed since the last hearing (5/13/20). What is the status of this Motion?
TELEPHONIC APPEARANCE REQUIRED
Tentative Ruling:
Party Information
Debtor(s):
Christopher Michael Niblett Represented ByElena Steers
Trustee(s):
Elizabeth (SV) F Rojas (TR) Pro Se
Page 1 of 696/24/2020 8:22:12 AM
United States Bankruptcy CourtCentral District of California
Continued from 4/1/20; 6/2/20This hearing was continued from 6/2/20 so that the parties could finalize an APO to resolve this matter. Nothing has been filed since the last hearing. What is the status of this Motion?
TELEPHONIC APPEARANCE REQUIRED.
Tentative Ruling:
Party Information
Debtor(s):
Christa Franck Bretz Represented BySteven A Alpert
Trustee(s):
Elizabeth (SV) F Rojas (TR) Pro Se
Page 2 of 696/24/2020 8:22:12 AM
United States Bankruptcy CourtCentral District of California
10:00 AMAhmad Heidari and Nafiseh Alamdar Heidari1:15-14044 Chapter 13
#3.00 Motion for relief from stay
U.S. BANK TRUST NATONAL ASSOC.
fr. 6/2/20
117Docket
Continued from 6/2/20This hearing was continued from 6/2/20 so that the parties could finalize an APO to resolve this matter. Nothing has been filed since the last hearing. What is the status of this Motion?
TELEPHONIC APPEARANCE REQUIRED.
Tentative Ruling:
Party Information
Debtor(s):
Ahmad Heidari Represented BySteven A Alpert
Joint Debtor(s):
Nafiseh Alamdar Heidari Represented BySteven A Alpert
Trustee(s):
Elizabeth (SV) F Rojas (TR) Pro Se
Page 3 of 696/24/2020 8:22:12 AM
United States Bankruptcy CourtCentral District of California
Continued from 5/13/20This hearing was continued from 5/13/20 so that the parties could work on an APO to resolve this matter. Nothing has been filed since the last hearing. What is the status of this Motion?
TELEPHONIC APPEARANCE REQUIRED.
Tentative Ruling:
Party Information
Debtor(s):
Levia Blane Arbuckle Represented ByKevin T Simon
Movant(s):
DEUTSCHE BANK NATIONAL Represented BySean C FerryKeith LabellEric P Enciso
Trustee(s):
Elizabeth (SV) F Rojas (TR) Pro Se
Page 6 of 696/24/2020 8:22:12 AM
United States Bankruptcy CourtCentral District of California
64Docket *** VACATED *** REASON: Cont'd to 7/22/20 @ 10:00 a.m. per order #69. lf
Ch. 13 Petition Date: 07/26/2017Plan confirmed 11/14/2017Service: Proper; co-debtor served No opposition filed.Property: 15956 Vincennes St., North Hills, CA 91343-2923Property Value: $500,000 (per debtor’s schedules)Amount Owed: $308,083.24Equity Cushion: 38.4%Equity: $191,916.76Post-Petition Delinquency: $5,342.55 (3 payments of $1,957.23, less suspense of $529.14)
Movant alleges that the last partial payment received was on or about 4/21/2020.
Disposition: GRANT under 11 U.S.C. 362(d)(1), with specific relief requested in paragraphs 2 (proceed under non-bankruptcy law); 3(a) (Movant permitted to engage in loss mitigation activities); and 7 (relief from 4001(a)(3) relief from stay).
NO APPEARANCE REQUIRED—RULING MAY BE MODIFIED AT HEARING.MOVANT TO LODGE ORDER WITHIN 7 DAYS.
Tentative Ruling:
Party Information
Debtor(s):
Priscilla Jeanette Bueno Represented By
Page 7 of 696/24/2020 8:22:12 AM
United States Bankruptcy CourtCentral District of California
Ch. 13 Petition Date: 04/02/2019Plan confirmed 07/22/2019Service: Proper. Opposition filed 6/11/2020Property: 8101 Etiwanda Ave, Reseda, CA 91335Property Value: $490,000 (per debtor’s schedules)Amount Owed: $369,282.52Equity Cushion: 24.6%Equity: $120,717.48Post-Petition Delinquency: $7,167.74 (3 payments of $1,922.58 plus $1,400 post-petition advances)
Movant alleges that the last partial payment received was on or about 10/15/2019. Movant requests relief under 11 U.S.C. 362(d)(1) with specific relief requested in paragraphs 2 (proceed under non-bankruptcy law); 3(a) (Movant permitted to engage in loss mitigation activities); and 7 (relief from 4001(a)(3) relief from stay).
Debtor opposes the motion because the property is necessary for effective reorganization. Debtor wishes to enter an APO to catch up on post-petition arrears. Is Movant amenable to an APO?
TELEPHONIC APPEARANCES REQUIRED.
Tentative Ruling:
Party Information
Debtor(s):
Daniel Correa Represented ByElena Steers
Page 10 of 696/24/2020 8:22:12 AM
United States Bankruptcy CourtCentral District of California
Continued from 4/29/20; 6/2/20This hearing was continued from 6/2/20 so that the parties could work on an APO to resolve this matter. Nothing has been filed since the last hearing. What is the status of this Motion?
TELEPHONIC APPEARANCE REQUIRED.
Tentative Ruling:
Party Information
Debtor(s):
Laurie Francene Kinzer Represented ByNathan A Berneman
Trustee(s):
Elizabeth (SV) F Rojas (TR) Pro Se
Page 12 of 696/24/2020 8:22:12 AM
United States Bankruptcy CourtCentral District of California
Continued from 4/1/20; 5/6/20This case was dismissed on 6/17/20, so the stay expired on that same day under 362(c)(2)(B). As Movant does not request extraordinary or in rem relief due to allegations of bad faith, this Motion is DENIED as moot.
MOVANT TO LODGE ORDER IN ACCORDANCE WITH THIS RULING WITHIN 7 DAYS. NO APPEARANCE REQUIRED.
Tentative Ruling:
Party Information
Debtor(s):
Maurice Vasquez Pro Se
Trustee(s):
Elizabeth (SV) F Rojas (TR) Pro Se
Page 14 of 696/24/2020 8:22:12 AM
United States Bankruptcy CourtCentral District of California
Continued from 5/13/20This hearing was continued from 5/13/20 so that the parties could work on an APO to resolve this matter. Debtor requested for mortgage forbearance due to the COVID-19 pandemic for 180 days (doc 40). Movant agrees to forbearance agreement (doc.41).
Due to the forbearance agreement, the Court finds cause to continue the hearing to September 10, at 10:00 AM.
NO APPEARANCE REQUIRED
Tentative Ruling:
Party Information
Debtor(s):
Andrew Blas Lorenzo Represented ByKevin T Simon
Trustee(s):
Elizabeth (SV) F Rojas (TR) Pro Se
Page 15 of 696/24/2020 8:22:12 AM
United States Bankruptcy CourtCentral District of California
Ch. 13 Petition Date: 01/15/2020Service: Proper. Co-Borrower served. No opposition filed. Property: 2014 Ford Fusion Property Value: $0Amount Owed: $7,756.94Equity Cushion: 0.0%Equity: $0.00.Post-Petition Delinquency: $808.40 (1 payment of $51.02 and 3 payments of $252.26)
Movant alleges that the last partial payment received was on or about 5/31/2019. Movant regained possession pre-petition on 09/24/19
Disposition: GRANT under 11 U.S.C. 362(d)(1), with specific relief requested in paragraph 2 (proceed under applicable non-bankruptcy law); 5 (co-debtor stay is terminated) and 6 (waiver of 4001(a)(3) stay).
NO APPEARANCE REQUIRED—RULING MAY BE MODIFIED AT HEARING.MOVANT TO LODGE ORDER WITHIN 7 DAYS.
Tentative Ruling:
Party Information
Debtor(s):
Fay Moss-Mervis Represented ByDavid S Hagen
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United States Bankruptcy CourtCentral District of California
Movant alleges that the last partial payment received was on or about 03/06/2020 and the lease matured on or around 04/15/2020. Movant regained possession of the property on or around 04/07/2020.
Disposition: GRANT under 11 U.S.C. 362(d)(1). GRANT relief requested in paragraph 2 (proceed under applicable non-bankruptcy law); 3 (no stay in effect); 5 ( co-debtor stay is terminated); and 6 (waiver of 4001(a)(3) stay).
NO APPEARANCE REQUIRED—RULING MAY BE MODIFIED AT HEARING.MOVANT TO LODGE ORDER WITHIN 7 DAYS.
Tentative Ruling:
Party Information
Debtor(s):
Armen Saroyan Represented ByMatthew D. Resnik
Trustee(s):
Elizabeth (SV) F Rojas (TR) Pro Se
Page 18 of 696/24/2020 8:22:12 AM
United States Bankruptcy CourtCentral District of California
#16.00 Status Conference re: First Amended Complaint to Recover Damages for:1) Breach of Contract ; 2) Breach of Fiduciary Duties;3) Aiding & Absetting; 4) Substantive Consolidation;5) Impose Liability under Alter Ego Theory;6) Unjust Enrichment /Restitutiion;7) To avoid and Recover Post-PetitionTransfer pursuant to 11 u.s.c. section 5498) To recover Avoided Transfer pursuant to 11 u.s.c. 550, and9) Automatic Preservation of Avoided Transfers pursuant to 11 u.s.c. section 551
Having reviewed the 6/10/20 Status Report (doc. 239), this status conference will be continued to August 19, 2020 at 10:00 a.m. At that time, the Parties should provide the Court with any update on the Ninth Circuit's decision.
NO APPEARANCE REQUIRED
Tentative Ruling:
Party Information
Debtor(s):
C.M. Meiers Company, Inc. Pro Se
Defendant(s):
Essex Insurance Company Pro Se
Plaintiff(s):
Bradley D Sharp Represented ByPage 23 of 696/24/2020 8:22:12 AM
United States Bankruptcy CourtCentral District of California
#18.00 Trustee's Final Report and Applications for Compensation
42Docket
Service proper. No objection filed. Having reviewed Trustee's final report, and finding that the fees and costs are reasonable and necessary, approval is GRANTED.
NO APPEARANCE REQUIRED. TRUSTEE TO LODGE ORDER WITHIN 7 DAYS.
Tentative Ruling:
Party Information
Debtor(s):
Vardui Vanessa Aleksanyan Represented ByKeith S Dobbins
Trustee(s):
Nancy J Zamora (TR) Pro Se
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United States Bankruptcy CourtCentral District of California
This matter was continued from 3/4/20. As of 6/16/20, Nothing has been filed since the 2/26/20 Status Report. Debtor anticipates the only matter left is a Motion for Final Decree. Why has this not been filed yet?
What is the status of this case? TELEPHONIC APPEARANCE REQUIRED
Tentative Ruling:
Party Information
Debtor(s):
Samuel James Esworthy Represented ByM. Jonathan Hayes
Page 30 of 696/24/2020 8:22:12 AM
United States Bankruptcy CourtCentral District of California
#22.00 Status Conference Re: Motion to Disallow Claims of Patricia Leupold (claim # 8-1)
fr. 10/22/19, 12/17/19, 3/4/20
37Docket
On 3/4/20, Partial Summary Judgment was granted in Favor of Plaintiff's Eighth Cause of Action ("Disgorgement Claim"). There are 8 remaining causes of action. The 6/24/20 hearing is a Status Conference regarding the remaining Claims Objection. The parties were to discuss mediation in the interim. Nothing has been filed since 3/4/20 concerning the status of the remaining claims.
TELEPHONIC APPERANCE REQUIRED
Tentative Ruling:
Party Information
Debtor(s):
Joe Kearney Represented ByRobert M AronsonRobert M. Aronson
Movant(s):
Joe Kearney Represented ByRobert M AronsonRobert M AronsonRobert M AronsonRobert M. AronsonRobert M. AronsonRobert M. Aronson
Page 31 of 696/24/2020 8:22:12 AM
United States Bankruptcy CourtCentral District of California
11:00 AMMaria Estela San Vicente1:19-11935 Chapter 11
#23.00 Debtor's Disclosure Statement Describing Chapter 11 Plan of Reorganization
81Docket
STANDARDReferences: In re A.C. Williams, 25 B.R. 173 (Bankr. N.D. Ohio 1982); See also In re Metrocraft, 39 B.R. 567 (Bankr. N.D.Ga. 1984); § 1125
1. Before a disclosure statement may be approved after notice and a hearing, the court must find that the proposed disclosure statement contains "adequate information" to solicit acceptance or rejection of a proposed plan of reorganization. 11 U.S.C. § 1125(b).
2. "Adequate information" means information of a kind, and in sufficient detail, so far as is reasonably practicable in light of the nature and history of the debtor and the condition of the debtor's books and records, that would enable a hypothetical reasonable investor typical of the holders of claims against the estate to make a decision on the proposed plan of reorganization. 11 U.S.C. § 1125(a).
3. Courts have developed lists of relevant factors for the determination of adequate disclosure. E.g., In re A.C. Williams, supra.
4. There is no set list of required elements to provide adequate information per se. A case may arise where previously enumerated factors are not sufficient to provide adequate information. Conversely, a case may arise where previously enumerated factors are not required to provide adequate information. In re Metrocraft Pub. Services, Inc., 39 B.R. 567 (Bankr. N.D.Ga. 1984). "Adequate information" is a flexible concept that permits the degree of disclosure to be tailored to the particular situation, but there is an irreducible minimum, particularly as to how the plan will be implemented. In re Michelson, 141 B.R. 715, 718-19 (Bankr. E.D.Cal. 1992).
Tentative Ruling:
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United States Bankruptcy CourtCentral District of California
11:00 AMMaria Estela San VicenteCONT... Chapter 11
5. The court should determine what factors are relevant and required in light of the facts and circumstances surrounding each particular case. In re East Redley Corp., 16 B.R. 429 (Bankr. E.D.Pa. 1982).
6. LBR 3017-1(a) requires at least 36 days notice to all parties in interest. FRBP 3017(a) provides that the disclosure statement be served by mail as required under FRBP 2002(b)
Disclosure not sufficient as it does not contain adequate information:
On pages 7-8 of the Disclosure Statement, Debtor lists Chase Bank as a Class 1b, (2nd dot) creditor. The Disclosure Statement states that Chase has a lien on Debtor's principal place of residence. Apparently, the creditor stopped sending statements to Debtor for years and Debtor has been unable to verify the existence of the lien and disputes this lien. Debtor proposes to pay nothing to this purported lienholder and may initiate an adversary proceeding to ensure permanent removal of the lien from the property. The Disclosure Statement does not list the amount disputed by Chase.
Under the Metrocraft standard, this is not adequate to provide a reasonable investor with enough information to make a decision on the proposed plan of reorganization. Investors and creditors do not know the extent to which Debtor may be liable--possibly effecting their right to payments under the plan.
Moreover, it appears that Debtor has not made any showing that JP Morgan Chase, as an FDIC-insured institution (See FDIC.Org), was properly served under Fed. R. Bankr. P. 7004(h). This section provides:
(h)Service on an insured depository institution (as defined in section 3 of the Federal Deposit Insurance Act) in a contested matter or adversary proceeding shall be made by certified mail addressed to an officer of the institution unless--
(1) the institution has appeared by its attorney, in which case the attorney shall be served by first class mail;
(2) the court orders otherwise after service upon the institution
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United States Bankruptcy CourtCentral District of California
11:00 AMMaria Estela San VicenteCONT... Chapter 11
by certified mail of notice of an application to permit service on the institution by first class mail sent to an officer of the institution designated by the institution; or
(3) the institution has waived in writing its entitlement to service by certified mail by designating an officer to receive service.
Here, Chase has not appeared by its attorney, nor waived in writing Chase's entitlement to certified mail. Chase was merely served at its P.O. box . Thus, the service does not comply with 7004(h).
TELEPHONIC APPERANCE REQUIRED
Party Information
Debtor(s):
Maria Estela San Vicente Represented ByThomas B Ure
Page 34 of 696/24/2020 8:22:12 AM
United States Bankruptcy CourtCentral District of California
David Seror (TR) Represented ByRichard BursteinMichael W DavisDavid SerorDavid Seror (TR)Steven T GubnerReagan E BoyceJessica L BagdanovReed BernetTalin KeshishianJorge A GaitanRobyn B Sokol
Trustee(s):
David Seror (TR) Represented ByRichard BursteinMichael W DavisDavid Seror
Page 36 of 696/24/2020 8:22:12 AM
United States Bankruptcy CourtCentral District of California
#25.00 Motion by Chapter 7 Trustee to: (1) Approve Sale of Real Property Free and Clear of all Liens, Interests, Claims, andEncumbrances with Such Liens, Interests, Claims, and
Encumbrances to Attach Proceeds Pursuan to 11 U.S.C. sections 363(b) and (f); (2) Approve Overbid Procedures; (3) Determine that Buyer is Entitled to Protection Pursuant to 11 U.S.C. Section 363(m)
2406Docket
Having considered the Motion to Sell and Wells Fargo Bank's response, the Court finds that Trustee has shown a sufficient business reason for the sale, that the sale is in the best interest of the estate, i.e., it is fair and reasonable, that it has been given adequate marketing, that it has been negotiated and proposed in good faith, and that it is an ‘arms-length’ transaction. The Sale and overbid procedure are approved on the terms proposed in the Motion. MOTION GRANTED.
TELEPHONIC APPEARANCE REQUIRED; TRUSTEE TO LODGE ORDER WITHIN 7 DAYS
Tentative Ruling:
Party Information
Debtor(s):
Owner Management Service, LLC Pro Se
Movant(s):
David Seror (TR) Represented ByRichard BursteinMichael W DavisDavid SerorDavid Seror (TR)Steven T GubnerReagan E BoyceJessica L Bagdanov
Page 38 of 696/24/2020 8:22:12 AM
United States Bankruptcy CourtCentral District of California
Reed BernetTalin KeshishianJorge A GaitanRobyn B Sokol
Trustee(s):
David Seror (TR) Represented ByRichard BursteinMichael W DavisDavid SerorDavid Seror (TR)Steven T GubnerReagan E BoyceJessica L BagdanovReed BernetTalin KeshishianJorge A GaitanRobyn B Sokol
Page 39 of 696/24/2020 8:22:12 AM
United States Bankruptcy CourtCentral District of California
Zamora, Chapter 7 Trustee v. Baron et alAdv#: 1:19-01083
#26.00 Status Conference Re: Compliant forAvoidance of Transfer; Recovery of AvoidedTransfer; Determination of Value, Priority, Extent and Validity of Lien; DeclaratoryRelief; Quiet Title; To Remove Cloud onTitle; and Injunction
fr. 9/18/19, 11/6/19, 1/8/20; 4/8/20
1Docket *** VACATED *** REASON: Order entered cont. to 8/19/20 @ 11am (eg)
Tentative Ruling:
Party Information
Debtor(s):
Anna Barseghian Represented ByAris Artounians
Defendant(s):
Van Baron Pro Se
Does 1-20 Pro Se
Plaintiff(s):
Nancy J Zamora, Chapter 7 Trustee Represented ByWesley H Avery
Trustee(s):
Nancy J Zamora (TR) Represented ByWesley H Avery
Law Office of Wesley H. Avery, APC
Page 40 of 696/24/2020 8:22:12 AM
United States Bankruptcy CourtCentral District of California
Rosen v. Wilmington Savings Fund Society, FSB, dba ChristiaAdv#: 1:18-01023
#28.00 Motion to Dismiss Adversary Proceeding
fr. 6/3/20
59Docket
Tentative ruling may be posted or updated before hearing. If this tentative is not updated by 4:00 p.m. on the day before the hearing, no tentative shall be posted and appearances are required.
Calls to the Court to check the status of tentative rulings are not permitted.
Tentative Ruling:
Party Information
Debtor(s):
David B. Rosen Represented ByLouis J Esbin
Defendant(s):
Wilmington Savings Fund Society, Represented BySonia Plesset EdwardsArnold L Graff
Selene Finance LP Represented BySonia Plesset EdwardsArnold L Graff
Chase Bank NA a National Banking Pro Se
Nationstar Mortgage, aka Mr. Represented ByValerie J Schratz
JPMORGAN CHASE BANK, N.A. Represented ByJoseph E AddiegoMonder Khoury
Page 42 of 696/24/2020 8:22:12 AM
United States Bankruptcy CourtCentral District of California
Rosen v. Wilmington Savings Fund Society, FSB, dba ChristiaAdv#: 1:18-01023
#29.00 Status Conferece re: First Amended Complaint for:1) Declaratory Relief2) Injuctive Relief for Violation of Automatic Stay3) Extent, Validity or Priority of Claim or Interest4) Turnover of Property of the Estate5) Contempt for Violation of Court Order6) Violation of California Penal Code section 470 and Commercial Code section 3-420 for wrongful alterationand Conversion of a Negotiable Instrument7) Negligence in the Handling and Management of Debtor'sAccount.8) Attorney fees and costs.
fr. 5/6/20
32Docket
- NONE LISTED -
Tentative Ruling:
Party Information
Debtor(s):
David B. Rosen Represented ByLouis J Esbin
Defendant(s):
Wilmington Savings Fund Society, Represented BySonia Plesset Edwards
Rosen v. Wilmington Savings Fund Society, FSB, dba ChristiaAdv#: 1:18-01023
#30.00 Motion for Default Judgment
fr. 5/6/20
47Docket
Tentative ruling may be posted or updated before hearing. If this tentative is not updated by 4:00 p.m. on the day before the hearing, no tentative shall be posted and appearances are required.
Calls to the Court to check the status of tentative rulings are not permitted.
Tentative Ruling:
Party Information
Debtor(s):
David B. Rosen Represented ByLouis J Esbin
Defendant(s):
Wilmington Savings Fund Society, Represented BySonia Plesset EdwardsArnold L Graff
Selene Finance LP Represented BySonia Plesset EdwardsArnold L Graff
Chase Bank NA a National Banking Pro Se
Nationstar Mortgage, aka Mr. Represented ByJared D Bissell
JPMORGAN CHASE BANK, N.A. Represented ByMary H Haas
Page 46 of 696/24/2020 8:22:12 AM
United States Bankruptcy CourtCentral District of California
Rosen v. Wilmington Savings Fund Society, FSB, dba ChristiaAdv#: 1:18-01023
#31.00 Motion to set aside RE: Entry of Default
fr. 6/3/20
56Docket
Tentative ruling may be posted or updated before hearing. If this tentative is not updated by 4:00 p.m. on the day before the hearing, no tentative shall be posted and appearances are required.
Calls to the Court to check the status of tentative rulings are not permitted.
Tentative Ruling:
Party Information
Debtor(s):
David B. Rosen Represented ByLouis J Esbin
Defendant(s):
Wilmington Savings Fund Society, Represented BySonia Plesset EdwardsArnold L Graff
Selene Finance LP Represented BySonia Plesset EdwardsArnold L Graff
Chase Bank NA a National Banking Pro Se
Nationstar Mortgage, aka Mr. Represented ByValerie J Schratz
JPMORGAN CHASE BANK, N.A. Represented ByJoseph E AddiegoMonder Khoury
Page 48 of 696/24/2020 8:22:12 AM
United States Bankruptcy CourtCentral District of California
Service not proper as Debtor was not served individually as required under LBR 9013-1(d), made applicable by LBR 7056-1(a)
Facts
In October 2015, plaintiffs Zohir and Delwara Uddin ("Plaintiffs") and debtor Manoj Mukherjee ("Debtor" or "Defendant") entered into a contract to demolish the existing structure and build a new home on Plaintiffs’ property at 22702 Leonora Drive, Woodland Hills, CA 91367 (RJN ex 1 "Exhibit B"). Pursuant to the agreement, Plaintiffs were to pay a sum total of four hundred thousand dollars ($400,000) to Debtor, who agreed to commence work on October 9, 2015 and complete the construction by January 23, 2016.
Between October 2015 and May 2017, Debtor furnished labor, services, equipment, and material for the project. While Debtor claimed to have been duly licensed by the Contractors State License Board (License #450270) at the time he entered into the agreement with the Plaintiffs, Debtor was later found by the state court to be unlicensed as a matter of law during the entirety of the project at issue. Ruling on Bifurcated Trial, RJN Ex. 3 (the "Feb. 13 Ruling"), internal p. 18. Plaintiffs claim that they themselves have neither ever held a California contractor’s license nor new of the requirements for one to properly hold the license. Plaintiffs claim to have relied on representations made by Debtor. (Uddin Decl. ¶¶ 8-9)
On June 30, 2017, Plaintiffs filed a complaint (Case No. LC105883) against Manoj Mukherjee, an individual, Mani Mukherjee & Associates, Inc., a California corporation, and Raminder Singh, an individual (collectively, "Defendants") alleging
Tentative Ruling:
Page 50 of 696/24/2020 8:22:12 AM
United States Bankruptcy CourtCentral District of California
causes of action including (1) Breach of Contract; (2) Breach of Implied Covenant of Good Faith & Fair Dealing; (3) Professional Negligence; (4) Fraud; (5) Disgorgement; (6) Negligent Infliction of Emotional Distress; (7) Breach of Implied Covenant to Perform Work in a Good and Competent Manner.
On October 16, 2017, Plaintiffs filed an Amended First-Amended Complaint for Damages, adding an eighth cause of action for (8) Slander of Title. Debtor filed a cross-complaint seeking compensation for the services performed.
The matter came on for a bench trial on various dates between December 2018 and April 2019, in Department W of the Los Angeles County Superior Court, Van Nuys Courthouse with the Honorable Virginia Keeny, presiding.
The first phase of trial concerned exclusively the issue of whether Debtor and Defendant Raminder Singh were licensed contractors. Following the presentation of evidence, the Court found that because Debtor failed to maintain workers’ compensation insurance at all times and allowed unlicensed persons to perform construction work on the project from the outset until the completion of the project, Debtor’s license was suspended, as a matter of law, during the entirety of the project. Feb. 13 Ruling, internal p. 18. Consequently, Plaintiffs were entitled to disgorgement of the entire amount paid to Debtor in the amount of $332,600.00 under Business and Professions Code §7031(b), and that Plaintiffs were entitled to a judgment of $219,000.00 against Mani Mukherjee & Associates, Inc. Id. at p. 19. Debtor also was barred from seeking compensation for services performed. Id..
On April 02, 2019 and before the second phase of trial, per agreement of the parties and by order of the state court, Plaintiffs’ fourth cause of action for fraud was dismissed without prejudice. RJN, Ex. 7. Trial resumed on April 03, 2019 and the parties reached a stipulated judgment on the four causes of action (Breach of Contract, Breach of Implied Covenant of Good Faith and Fair Dealing, Negligence, and Breach of Implied Covenant to Perform Work in a Good and Competent Manner). As to each cause of action, the court entered judgment for Plaintiffs for only nominal damages of $100 on each of the stipulated causes of action. RJN, Ex. 4, internal p. 3-4.
The court moved to the liability phase on Plaintiffs’ claim to punitive damages on their causes of action for Professional Negligence and Slander of Title. On April 9,
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United States Bankruptcy CourtCentral District of California
2019, the Superior Court heard evidence and testimony and determined that "[t]he court does not find through clear and convincing evidence that Manoj Mukherjee has engaged in conduct which constitutes malice." RJN, Ex. 9 (the "Apr. 9 Minute Order"). The State Court also found credible Mr. Mukherjee’s testimony that while he allowed the use of an unlicensed contractor to work on the project, he did this with full knowledge of the Plaintiffs and at the request of the Plaintiffs. Id. Plaintiffs’ claim for punitive damages was denied. Id.
On May 23, 2019, Debtor filed a bankruptcy petition under chapter 7. Debtor’s assets were $828,575.00 or less and his liabilities were over $1,481,887.64. Plaintiffs dispute this fact as they have not been able to take any post-judgment discovery as to Debtor’s financial condition. Pls.’ Statement of Genuine Issues of Material Fact, p. 10. On June 20, 2019, judgment was entered against Debtor and in favor of Plaintiffs in the amount of $333,000.00. RJN, Ex. 4. The judgment is now final and non-appealable.
On August 30, 2019, Plaintiffs filed the complaint objecting to discharge of debt under 11 U.S.C. §523(a)(2) and (a)(6) commencing this adversary action (the "Complaint"). On October 1, 2019, Debtor filed his answer to the Complaint, alleging among other affirmative defenses, that the matters raised in the adversary are subject to the doctrine of res judicata and barred from repeated adjudication.
Debtor moves for summary judgment on grounds that the debt owed to Plaintiffs was not obtained by false pretenses, false representation, or actual fraud under 11 U.S.C. §523(a)(2)(A), or by willful or malicious injury by the Debtor under 11 U.S.C. §523(a)(6). Debtor argues that the state court judgment in favor of Plaintiffs provides the operative adjudicated facts necessary for finding that Debtor is entitled to a discharge, and that relitigation of those claims is precluded by the doctrine of res judicata. Alternatively, Debtor seeks summary adjudication on the 11 U.S.C. §523(a)(2)(A) fraud claim on a theory of issue preclusion. Further, Debtor argues that the uncontroverted facts demonstrate no genuine issue of fact exists and that Debtor is consequently entitled to summary judgment.
Standard
Summary judgment shall be granted "if the movant shows that there is no
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genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FRCP 56(a); see also FRBP 7056. The moving party must show that a fact cannot be disputed by citing to "materials in the record, including depositions documents, electronically stored information, affidavits or declarations, stipulations… or other materials…" FRCP(c)(1)(A).
The moving party has the burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party shows the absence of a genuine issue of material fact, the nonmoving party must go beyond the pleadings and identify facts that show a genuine issue for trial. Id. at 324. The nonmoving party must show more than "the mere existence of some alleged factual dispute… the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). The court must view the evidence in the light most favorable to the nonmoving party. Tolan v. Cotton, 572 U.S. 650, 656-57 (2014). Summary judgment must not be granted if "a reasonable juror, drawing all inferences in favor of the nonmoving party, could return a verdict in the nonmoving party’s favor." James River Ins. Co. v. Hebert Schenk, P.C., 523 F.3d 915, 920 (9th Cir. 2008). However, the evidence offered by the parties must be believable. See Scott v. Harris, 550 U.S. 372, 380-81 (2007). "When opposing parties tell two different stories, one of which is blatantly contradicted by the record, so that no reasonable jury could believe it, a court should not adopt that version of the facts for purposes of ruling on a motion for summary judgment." Id.
Analysis
I. Res Judicata
As a preliminary matter, the doctrine of res judicata is inapplicable to the instant case. Under 28 U.S.C. §1334(a), federal district courts possess original and exclusive jurisdiction over cases arising under title 11. Debtor’s argument for claim preclusion is likely without merit because Plaintiffs’ current causes of action under 11 U.S.C. §523(a)(2)(A) and 11 U.S.C. §523(a)(6) have not and could not have been previously litigated between the parties in state court.
The Supreme Court in Brown v. Felsen confirmed this reasoning, holding that res judicata has no preclusive effect on dischargeability issues in bankruptcy
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proceedings. Brown v. Felsen, 442 U.S. 127 (1979). "It would be inconsistent with the philosophy of the 1970 amendments to adopt a policy of res judicata which takes these §17 questions away from bankruptcy courts and forces them back into state courts." Brown, 443 U.S. at 136. The Supreme Court explained that the congressional intent behind those amendments was to commit dischargeability issues to the jurisdiction of the bankruptcy court, that giving finality to state court rulings on §17 questions would have an undercutting effect. Id. at 135.
II. Issue Preclusion & Nondischargeability
Debtor alternatively requests summary adjudication on Plaintiffs’ nondischargeability claim under 11 U.S.C. §523(a)(2)(A), principally arguing that the issue of fraud was decided finally and on the merits in the parties’ prior state court proceeding.
Debtor cites a Ninth Circuit decision holding that "[T]he full faith and credit requirement of §1738 compels a bankruptcy court in a §523(a)(2)(A) nondischargeability proceeding to give collateral estoppel effect to a prior state court judgment." Gayden v. Nourbakhsh (In re Nourbakhsh), 67 F.3d 798, 801 (9th Cir. 1995). The same court has held that if the issue of fraud has been litigated in state court, the state court judgment would preclude relitigation of the same issue in the bankruptcy court in discharge proceedings. In re Nourbakhsh, 67 F.3d at p. 801. In determining the preclusive effect of a state court judgment, a federal court must apply that state’s law of issue preclusion. Harmon v. Kobrin (In re Harmon), 250 F.3d 1240, 1245 (9th Cir. 2001). California courts apply issue preclusion to prevent "relitigation of issues argued and decided in prior proceedings." Lucido v. Superior Court, 51 Cal. 3d 335, 341 (Cal. 1990)(en banc).
For issue preclusion to apply under California law, there are five threshold requirements: "First, the issue sought to be precluded from relitigation must be identical to that decided in a former proceeding. Second, this issue must have been actually litigated in the former proceeding. Third, it must have been necessarily decided in the former proceeding. Fourth, the decision in the former proceeding must be final and on the merits. Finally, the party against whom preclusion is sought must be the same as, or in privity with, the party to the former proceeding. Lucido, 51 Cal.
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3d at 341. California further places an additional limitation on issue preclusion: courts may give preclusive effect to a judgment "only if application of preclusion furthers the public policies underlying the doctrine." In re Harmon, 250 F.3d at 1245 (citing Lucido, 51 Cal.3d at 342-43, 272 Cal.Rptr. 767, 795 P.2d 1223).
III. Fraud under § 523(a)(2)(A)
Debtor contends that the undisputed facts from the State Court record establish that Plaintiffs cannot prove all of the elements under §523(a)(2)(A), and so there is no genuine issue of fact to be determined at trial.
For a debt to be nondischargeable under 11 U.S.C. §523(a)(2)(A), the creditor must establish: (1) that the debtor made a representation; (2) the debtor knew at the time the representation was false; (3) the debtor made the representation with the intention and purpose of deceiving the creditor; (4) the creditor relied on the representation; and (5) the creditor sustained damage as the proximate result of the representation. Apte v. Japra (In re Apte), 96 F.3d 1319, 1322 (9th Cir. 1996). These requirements are equivalent to a California state claim for fraud (see Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 974).
In their Complaint against discharge under §523(a)(2)(A), Plaintiffs allege that Debtor "knowingly, intentionally, and willfully made misrepresentations to the Plaintiffs." Complaint, p. 11. Plaintiffs allege these misrepresentations were that Debtor was a duly licensed contractor in the state of California with the knowledge, ability, expertise and experience to perform and/or oversee the work called for in the agreement, and that Debtor’s contractor’s license was in good standing and that he had the knowledge and ability to comply with all laws applicable to this project. Id. at 11-12.
Plaintiffs and Debtor disagree on whether the fraud issue was actually litigated in the state court proceeding, and whether the issue was finally decided on the merits. Debtor maintains that the issue of fraud was actually litigated in the prior proceeding. Debtor contends that in assessing the Plaintiffs’ punitive damages claim, the state court did evaluate and find that Plaintiffs failed to establish by clear and convincing evidence that Debtor committed fraud, because Plaintiffs were fully aware that the contractors were unlicensed and required that they be used. Apr. 9 Minute Order.
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Debtor argues that there was simply no misrepresentation on his part on which to base a fraud claim. Debtor points out that, while Plaintiffs had the chance to prove their claims in the Superior Court action, they did not even testify in support of their claims. It was the lack of evidence that stopped Plaintiffs from further litigating the issue, according to Defendant.
Plaintiffs’ arguments center on the fact that no final judgment was rendered on their cause of action for fraud because they chose to dismiss it without prejudice prior to the second phase of trial. RJN, Ex. 7. Further, because the first phase of the bifurcated trial concerned only the issue of licensure, Plaintiffs argue that fraud was not at issue. The record reflects, however, that Plaintiffs did offer evidence at the April 9 trial on punitive damages. Apr. 9 Minute Order. Plaintiffs arguments seem to conflate the concepts of claim and issue preclusion. In In re Go Global, Inc., the Bankruptcy Appellate Panel of the Ninth Circuit (the "BAP") explained that:
[C]laim preclusion applies to preclude an entire second suit that is based on the same set of facts and circumstances as the first suit, while issue preclusion ... applies to prevent relitigation of only a specific issue that was decided in a previous suit between the parties, even if the second suit is based on different causes of action and different circumstances.
In re Go Global, 2016 WL 6901265 (B.A.P. 9th Cir.. Nov. 22, 2016)(citing Five Star Capital Corp. v. Ruby, 194 P.3d 709, 713–14 (Nev. 2008) (en banc), as modified byWeddell v. Sharp, 350 P.3d 80, 81–86 (Nev. 2015)). The Court will properly give preclusive effect to factual findings made by the state court.
An award of punitive damages may be appropriate if a breach is a result of malice, oppression, or fraud. See Cal. Civ. Code ("C.C.P.) § 3294. C.C.P. § 3294 provides for the recovery of punitive damages in non-contract breach civil cases. Each finding supplies an independent basis for a punitive damages award under C.C.P. § 3294. See Coll. Hosp. Inc. v. Super. Ct., 8 Cal.4th 704, 721 (Cal. 1994).
C.C.P. § 3294 provides statutory definitions of these terms. "Malice" is defined as either: (1) conduct that the defendant intends to cause injury to the plaintiff
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("Intentional Malice"); or (2) despicable conduct carried on by the defendant with a willful and conscious disregard of the rights or safety of others ("Despicable Malice"). C.C.P. § 3294(c)(1). "Oppression" means "despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights." Id. § 3294(c)(2). And, "fraud" refers to "an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury." Id. § 3294(c)(3).
Only "intentional malice," see Brandstetter v. Derebery (In re Derebery), 324 B.R. 349, 356 (Bankr.C.D.Cal. 2005), and fraud expressly require an intent to cause injury. In re Plyam, 530 B.R. 456, 465 (B.A.P. 9th Cir. 2015). As a result, only those findings satisfy the § 523(a)(6) willfulness requirement for the purposes of issue preclusion. Id. Conversely, "despicable malice" and "oppression", which arise from acts in conscious disregard of another's rights or safety, fail to satisfy the requisite state of mind for § 523(a)(6) willfulness. Id.
Fraud was included as a consideration in the state court’s Apr. 9 Minute Order. There, the Superior Court found that Plaintiff did not establish that Debtor committed fraud, defined under C.C.P. § 3294(c)(3) as "an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury." The Superior Court finding was based on the credible testimony of Debtor that Plaintiffs were aware of the unlicensed status of the Debtor and the contractors, and even specifically requested the use of such unlicensed contractors. Apr. 9 Minute Order. The Superior Court "found credible Mr. Mukherjee’s testimony that while he allowed the use of an unlicensed contractor to work on the project, he did this with full knowledge of the Plaintiffs and at the request of Plaintiffs." Id. Plaintiffs are precluded from asserting otherwise.
The issue of whether Debtor committed fraud was actually litigated as each party was present and represented at the April 9 trial, and the state court took evidence from Debtor and Plaintiffs before making its determination. It was necessary for the state court to decide whether Debtor committed fraud as the statute applied is written in the disjunctive. Under C.C.P. § 3294, each finding (malice, oppression, or fraud) supplies an independent basis for a punitive damages award. The credibility findings
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described above that were made by the state court are preclusive in this adversary proceeding.
Defendant has met his burden of showing "that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. at 325. The burden therefore shifts to the Plaintiffs "to designate specific facts showing that there is a genuine issue for trial." Sluimer v. Verity, Inc., 606 F.3d 584, 586 (9th Cir. 2010). "To carry this burden, the non-moving party must do more than simply show that there is some metaphysical doubt as to the material facts. . .The mere existence of a scintilla of evidence ... will be insufficient; there must be evidence on which the jury could reasonably find for the non-moving party." Id. (internal citation omitted).
Plaintiffs arguments that the competing declarations between themselves and Debtor at present establish a triable issue of fact are not sufficient to meet the burden shifted when a non-moving party responds to a summary judgment motion. Further, Plaintiffs’ allegations regarding Debtor’s knowing misrepresentation and intent to deceive are not supported by additional evidence. Plaintiffs argument that because they did not need to present the relevant evidence in state court, they did not does not hold water at this stage of the litigation. While that may have been their procedural position in the state court proceedings, here Plaintiffs had a duty to oppose a summary judgment with evidence to support their contention that a triable issue of fact remains. Federal Rule 56(e) "requires the nonmoving party to go beyond the pleadings and by her own affidavits, or by the ‘depositions, answers to interrogatories, and admissions on file,’ designate ‘specific facts showing that there is a genuine issue for trial.’ Fed.R.Civ.P. 56(c); Fed.R.Bankr.P. 7056. "The district judge is not required to comb the record to find some reason to deny a motion for summary judgment." Forsberg v. Pac. Nw. Bell Tel. Co., 840 F.2d 1409, 1418 (9th Cir. 1988).
a. Strict Liability under §7031(b)
The state court’s findings that Debtor did not misrepresent his licensed status at the time the contract was signed and that his good faith was shown when remedying the violations bolster Debtor’s argument for summary judgment on Plaintiffs’ §523(a)(2)(A) claim. Such misrepresentations are not required for a finding under the strict liability standard applied by California Business & Professions Code ("B & P") §
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An award under B & P Code §7031(b) does not necessarily constitute a nondischargeable debt within the meaning of 11 U.S.C. §523(a)(2)(A). Ghomeshi v. Sabban (In re Sabban), 384 B.R. 1 (9th Cir.BAP2008). A debtor’s liability for a debt must flow from his or her fraud. Cohen v. De La Cruz, 523 U.S. 213 (1998). Because the B & P Code §7031(b) is "neutral as to fraudulent intent and was enacted to deter unlicensed contractors from offering their services for pay," an award under §7031(b) does not necessarily arise from the debtor’s fraudulent representations as required under §523(a)(2)(A). In re Sabban, 384 B.R. at 7. Even if a creditor had known about the debtor’s unlicensed status, the creditor still could have obtained an award under B & P Code §7031(b). Id. Such an award, the court in Sabban concluded, can be unrelated to the debtor’s fraud and could have been granted in the absence of justifiable reliance. Id. at 6.
The State court chose to approve the parties’ agreement to judgment of nominal and statutory damages against Debtor, as the fraud cause of action was dismissed without prejudice before it could be considered. RJN, Ex. 4. Further, the issue of Debtor’s lack of fraudulent intent and good faith in remedying his suspensions was ruled on by the state court in both the Feb. 13 Ruling and the Apr. 9 Minute Order. Feb. 13 Ruling, p. 17; Apr. 9 Minute Order.
For the reasons stated above, this Court finds that there is no genuine issue of material fact to be tried with regard to Plaintiffs’ §523(a)(2)(a) claim and so Defendant is entitled to judgment as a matter of law.
IV. No Genuine Issue of Material Fact under §523(a)(6)
Under 11 U.S.C. §523(a)(6), debts for a willful and malicious injury are excepted from discharge in bankruptcy. Plaintiffs alleged in their Complaint under §523(a)(6) that Debtor acted with "willful and conscious disregard for the rights of Plaintiffs and/or to with the intent to injure Plaintiffs and/or in reckless and conscious disregard of Plaintiffs’ rights." Complaint, p. 13. Plaintiffs’ theory for nondischargeability under §523(a)(6) is encompassed in paragraphs 48 and 49 of the Complaint:
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1:00 PMMani MukherjeeCONT... Chapter 7Debtor "deliberately and intentionally engaged in a wrongful act where he intentionally induced Plaintiffs to pay or direct payment of funds under false pretenses, knowing that he would not perform his or his company’s obligations and would file bankruptcy instead."
"Moreover, he deliberately and intentionally made fraudulent promises to Plaintiffs, which Debtor never intended to honor. Instead, [Defendant] intended to abscond with Plaintiff’s funds and, if caught, file bankruptcy or otherwise avoid repayment and/or disgorgement based upon Plaintiffs’ claims against him."
Complaint, ¶ 48-49.
Debtor responds that, under Plaintiffs’ expansive rationale, every bankruptcy proceeding, which necessarily affects a creditor’s ability to collect on a debt, would be subject to non-discharge under §523(a)(6). Debtor cites Kawaahau v. Geiger, 523 U.S. 57 (1998), in which the Supreme Court held that §523(a)(6) does not apply to those debts arising from unintentionally inflicted injuries. Debtor explains that the word "willful" in (a)(6) modifies the word "injury," indicating that non-dischargeability takes a deliberate or intentional injury, not merely a deliberate or intentional act that leads to an injury. Debtor distinguishes that intentional torts generally require that the actor intend "the consequences of an act", not simply "the act itself." Id. at p. 61-62.
Debtor points out that the debt in question arises from §7031(b), a strict liability statute for which intent is not a consideration. Judicial Council of Cal. v. Jacobs Facilities, Inc., 239 Cal.App.4th 882, 897 (2015). Debtor highlights how the state court judgment rendered against him alone is no indication of willful or malicious intent. In the Apr. 9 Minute Order, the state court did not find that Debtor "engaged in conduct which constitutes malice." Apr. 9 Minute Order. The court also did not find Debtor’s conduct to be "oppressive" under the circumstances. Id. As stated above, the court also did not find that Debtor committed fraud. Id. Given the findings made by the state court, Debtor maintains that there is no genuine issue of material fact to be tried with regard to Plaintiffs’ §523(a)(6) claim.
Plaintiffs allege triable issues of fact which they argue must be presented to the
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Court. Plaintiffs, however, miss the import of the state court’s findings in the Apr. 9 Minute Order. The court found credible Debtor’s testimony that he allowed the use of unlicensed contractors with the full knowledge of Plaintiffs and at the request of Plaintiffs. Apr. 9 Minute Order. The state court also found that Plaintiffs did not establish by clear and convincing evidence that Debtor has engaged in conduct which constitutes malice. Id. The court also found that Plaintiffs had not established by clear and convincing evidence that Defendant committed fraud. (RJN ex. 9 "Apr. 9 Minute Order") The court also found, as a matter of fact, that Debtor had a valid license at the time of the agreement. (Feb. 13 Ruling on Bifurcated Trial, p. 16) Again, the cause of action alleging fraud was dismissed without prejudice prior to the presentation of any evidence on that matter.
Plaintiffs’ argument for nondischargeability under §523(a)(6) appears a bit stretched. The thrust of Plaintiffs’ theory is that the Debtor intended to defraud Plaintiffs from the beginning and maintained bankruptcy as an option to fall back on. As far as the record indicates, however, Plaintiffs have not offered any evidence to counter the state court findings or show why the state court findings should not be preclusive in this adversary matter. Plaintiffs conjecture of a greater scheme by Defendant involving willful and malicious injury will not suffice at summary judgment.
The Ninth Circuit has repeatedly recognized that "a simple breach of contract is not the type of injury addressed by §523(a)(6)" and held that "an intentional breach of contract is excepted from discharge under §523(a)(6) only when it is accompanied by malicious and willful tortious conduct." In re Riso, 978 F.2d 1151, 1154 (9th Cir. 1992). The Superior Court having found Debtor not to have acted with malice, the remainder of Plaintiffs’ claim essentially sounds in breach of contract and fraud. These two injuries, standing alone, do not warrant protection under §523(a)(6). "Where a particular matter is specifically dealt with in one part of the Bankruptcy Code, that specific provision will govern over more general provisions in the Bankruptcy Code." See Law v. Segal, 574 U.S. 415, 421 (2014). Plaintiffs fraud claims were more appropriately brought, and resolved, under §523(a)(2)(A) .
V. Public Policy
The California Supreme Court identified the following three policies
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underlying the doctrine of collateral estoppel: "preservation of the integrity of the judicial system, promotion of judicial economy, and protection of litigants from harassment by vexatious litigation." Baldwin, 249 F.3d at 919-920. In many jurisdictions, this requires that the party "against whom collateral estoppel is being asserted had a full and fair opportunity to litigate the issue." D'Arata v. N.Y. Cent. Mut. Fire Ins. Co., 564 N.E. 2d 634, 636 (1990). Lucido, 795 P.2d at 1225; Vandenberg v. Superior Court, 982 P.2d 229, 237 (1999).
Because a debtor whose debt is declared nondischargeable under §523(a) continues to bear the financial burden that drove the debtor into bankruptcy in the first place, §523 stands in tension with the fundamental bankruptcy goal of providing debtors with a "fresh start." In re Sanderson, 723 F.3d 1094 (9th Cir. 2013). For this reason, §523(a) is narrowly construed against the objecting creditor and in favor of the debtor. In re Betancourt, BAP No. CC–14–1010–KiKuDa, 2015 WL 3500322 (B.A.P. 9th Cir., Jun. 3rd, 2015). Based on the record, Plaintiffs had a full and fair opportunity to litigate the fraud and malicious conduct issues. Plaintiffs were represented at the both portions of the trial and presented evidence for consideration by the state court.
Moreover, the principles of federalism underlying Full Faith and Credit would be undermined should this Court relitigate the question of whether Defendant engaged in fraudulent, malicious, or oppressive conduct. In the present context, application of issue preclusion promotes judicial economy and conserves judicial resources because this Court will not have to hold a trial to determine issues that were already decided and confirmed by the Superior Court. Lastly, under the circumstances presented by this case, application of issue preclusion will protect Defendant from repetitive litigation because Plaintiff was represented by counsel and had a full and fair opportunity to litigate the issues in the state court proceedings
Conclusion
For the reasons stated above, Defendant’s Motion for Summary Judgment is GRANTED as to Plaintiffs’ claims under 11 U.S.C. §523(a)(2)(A) and 11 U.S.C. §523(a)(6).
Party Information
Debtor(s):
Mani Mukherjee Represented By
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Rob Kolson Creative Productions, Inc. v. Stander et alAdv#: 1:20-01011
#37.00 Status Conference re Complaint to set asidefraudulent transfers; Constructive TrustEquitable Lien, Reverse Alter Ego Liability andDeclaratory Relief and for Damages
